August 26, 2010 3:17 pm

The Washington Policy Center, a conservative outfit, is touting this surprising legal analysis of the income tax initiative on the November ballot.

It’s surprising, to me anyway, because it was written for the think tank by Phil Talmadge, once a prominent Democratic legislator and Washington Supreme Court justice. And because it quite bluntly concludes that Initiative 1098 is unconstitutional.

Feeds

Frankly I’m not surprised. It was poorly conceived even for it’s stated objectives. Let’s even set aside the Constitutional issues, we’re told the measure will reduce regressivity in our tax structure but the only tax exchanged for this income tax on the wealthy, is on property. How does that help reduce the unfair burden this state puts on the poor?

If they didn’t bother to write it to their own objectives, we shouldn’t be shocked they ignored some Constitutional issues.

I’d rather it fail or be struck down so we can replace it eventually with a Constitutional Amendment swapping a big bite out of sales tax with a graduated income tax. This would also align the interest of our small/medium sized employers with lower income folks since they struggle with the same sales tax and even more absurd startup punishing B&O.

Why is a B&O tax start-up punishing? The smallest businesses are exempt, to begin with (start-up or not). They are not exempt from property tax, sales/use tax. or any other tax. They are hit more by unemployment insurance and worker comp taxes- with no exemptions. What exemptions from local taxes does Gig Harbor provide for a start-up business?

Businesses are not people, where we should differentiate between the needy and the wealthy. Businesses should carry their proportionate share of the tax burden, based on their footprint, not whether they are ran by wise or poor managers. A poorly managed business of a certain size shouldn’t be given a tax break for poor management over a well-manages business of the same size. The b&o tax treats similarly-sized businesses similarly- unlike the games that get played with an income tax.

Derek,the problem with an inome tax is, once it is in place, it will never go away!!! Then if the income tax is passed you will see the sales tax magically brought back by the politicians who will say the tax is only temporary! The voters are smart enough to see what a disaster a tax like this would be for their finances!The only way for an income tax to suceed,would be to, put a cap on the tax that would a permanent cap and no person or organization could remove it! If there are no safeguards in place, you can bet the spendaholics will look for a way to get around any barriers that exists!

Jim, only the smallest businesses are exempt (isn’t it $200k? You’d probably know better than I.) I think it’s sick to have an income tax on gross receipts rather than net.

As for exemptions for startups in GH we only the powers granted to us by the State which means none, though we also have no local B&O for anyone. So everyone pays the normal property and sales tax as the case may be.

My point being that B&O sorta perversely favors larger established businesses, which tend to be out of state chains, against smaller competitors. From a public policy standpoint I think small business entrepreneurship is favorable to Mega Store R Us. So even if the income tax were flat rather than graduated, it’s still preferable to any tax on gross receipts.

But you do give good examples of the disadvantages like subsidizing incompetently managed enterprises.

Your point is well taken, that’s why I’d make it a Constitutional amendment. Reduce the sales tax and place a big fat cap on it that would take 2/3 of the Legislature and voter approval to increase. It’s also one reason why I oppose this particular initiative which gives us no such guarantee.

Phil should have been the governor. He is not a brain dead bureaucrat and his politics are based on what is – not what he would like it to be – He is not of the “system” and he scared the day lights out of everyone in Olympia.

He will not be governor tho because those who buy the system and the legislature don’t want him there because they can’t control him….

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